Data Point of the Week: AR Could Boost Apple’s Software & Services by $9B in the Next Three Years

Despite downplaying AR in the iPhoneX unveiling last week (to ours and others’ disappointment), Apple is intent on positioning ARKit to drive iOS device sales. But there’s another revenue stream it could drive, outside of Apple’s core (excuse the pun) revenue: software and services.

Specifically, it could drive up to $9 billion in additional software and services revenue over the next three years according to Morgan Stanley. This is the revenue category for Apple that includes app sales (its 30 percent cut), and other services like iCloud. These could be driven by developer activity and consumer uptake of ARkit apps.

According to Morgan Stanley analyst Katy Huberty:

We believe ARKit completes the Apple software and hardware ecosystem and gives Apple a significant first mover advantage. With the launch of ARKit, Apple now controls both the hardware upon which AR applications can be run and the software platform for which the third-party applications can be created. As a result, we expect much more widespread adoption of AR on the iOS system vs. Google Tango and ARCore (at first) as developers realize the potential for broad distribution across the iOS platform.

As we examined, there will be a platform war between ARkit and ARCore that is analogous to the mobile OS wars between iOS and Android over the past decade. Google holds advantage in addressable market ($2 billion global android devices), but is somewhat disadvantaged by a fragmented base of devices and Android versions.

An ARtillry Intelligence Briefing is in process that looks at ARkit vs. ARCore in much greater detail. Stay tuned for a lot more on this topic.

For a deeper dive on AR & VR insights, see ARtillry’s new intelligence subscription, and sign up for the free ARtillry Weekly newsletter.

Disclosure: ARtillry has no financial stake in the companies mentioned in this post, nor received payment for its production. Disclosure and ethics policy can be seen here.